Scotland: BrewDog sells 23% of business to private equity firm

San Francisco-based TSG Consumer Partners agreed to buy 23% of BrewDog, the iconic Scottish brewer, in a deal worth £213m ($265 million). The transaction involved £100million to fund BrewDog's continued global expansion, and the balance of proceeds to provide for early shareholder liquidity. Early investors, who purchased share in Equity for Punks I in February 2010 could see a return of 2,765% of their original investment. Even investors from the last crowd-funding round, called Equity for Punks IV, in April 2016 made a solid return of 177% in just one year.

At a shareholders meeting on 29 March, 95% voted in favor for approving  changes to BrewDog’s capital structure, thus clearing the way for the investment . The changes include the issue of preference shares to TSG, with the prospect of an annual return of 18% if the company is bought or listed on the stock market.

At least it looks like the independent brewing scene has again lost another part a part of its innocence by betraying its ideals. At last year’s shareholder meeting BrewDogs founders James Watt and Martin Dickie still propagated their derision of big industrial beer companies like Diageo and AB InBev  by announcing an official change in their constitution, entrenching the brewery’s independence by passing a motion to ensure that BrewDog can ‘never be sold to a monolithic purveyor of industrial beer’.

In this context it is interesting to know that TSG Consumer Partners did not only invest in consumer brands like Glaceau vitamin water and Smashbox Cosmetics but is also co-owner of Los Angeles-based Pabst Brewing Company, a holding company contracting for the brewing of over two dozen brands of beer and malt liquor from defunct American breweries including signature brew Pabst Blue Ribbon. Pabst Brewing Company is these days set to open a new Pabst microbrewery and taproom on the site of the historic brewery in Milwaukee.

The decision to accept investment from a private equity group gave some headwind in social media to the founders, who cast themselves in the role of a punk brewer sceptical of major corporations.  The right to use the term punk was recently questioned in an open letter signed by dozens of punk rock bands.

Watt and Dickie defended the move, saying that both remain the largest shareholders in the business and plan to stick around to keep growing the brand.

 

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